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VW pays a fine for the first time due to the exhaust gas manipulation in Germany. But that does not solve the problems of our economic system, in which scandals are the rule.

Volkswagen: Madness has method

VW pays a fine for the first time due to the exhaust gas manipulation in Germany. But that does not solve the problems of our economic system, in which scandals are the rule.

Volkswagen: Madness has method
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  • Page 1 — Madness has method
  • Page 2 — fines in double-digit billions
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    Thomas Beschorner is professor of business ethics and director of Institute of Business Ethics at University of St. Gallen. His research and teaching areas are in field of tension between economics, ethics and culture as well as in area of corporate social responsibility.

    It sounds like a lot of money that Volkswagen has to raise now. A billion euros fine, yesterday news agencies, auto company had to pay because of exhaust gas manipulation. This sum is not particularly high in terms of company's record profit. It could have hit group a lot harder, would finally create legal and societal preconditions for it to discipline companies more and to remind m of ir mission for common good.

    Finally, it is becoming increasingly clear in diesel affair what renowned management orist Henry Mintzberg wrote in a small text with headline "Don't call it a scandal" almost three years ago. Mintzbergs Simple message: This is not a scandal, not a runaway of ordinary, but rar symptomatic of economic system that we call capitalism. And that, you could continue, is basically scandalous thing.

    Scandalous, but not a scandal are also incidents around Facebook, which have been known and widely discussed in recent months. 2013, data from almost 90 million Facebook users were deducted without ir consent from an app and later used by company Cambridge Analytica to influence US election campaign for good money.

    Not individual cases, but an industry phenomenon © private Thomas Beschorner

    is professor of business ethics and director of Institute of Business Ethics at University of St. Gallen. His research and teaching areas are in field of tension between economics, ethics and culture as well as in area of corporate social responsibility. Twitter: @ThBeschorner

    The diesel gate started with Volkswagen, but now it is clear that exhaust gas manipulations are an industry phenomenon that many companies in automotive industry have practised similarly. And quite analogously, access to Facebook data by Cambridge Analytica is not even tip of iceberg, but a small floating plaice. As New York Times reported a few days ago, Facebook allowed at least 60 corporations – from Amazon to Apple and Samsung to Microsoft – to access personal information of users and ir friends, including those of friends of friends, if necessary.

    It is just two of many examples of recent past – and probably of future – that show: Madness has a Method! Companies seem to treat violation of legal norms and moral misconduct in sense of economic logic, namely: penalties for detection probability, in consideration of potential economic gain. Anyone who, on this basis, lobhudelt moral quality of a market economy and overlooks serious negative effects of capitalism on society, has eir no more in common, is ideologically deluded or both.

    Instead of surrendering to se developments, it seems more urgent than ever to tackle long overdue socio-political changes that curb excesses of entrepreneurial action and recalibrate role of companies in society. Four related proposals:

    Political whip: Corporate criminal law

    Firstly, role of companies in our society requires politically-flanking measures which include not only carrot but also whip. In this context, discussion about a corporate criminal law in Germany is of particular relevance and overdue.

    Up to now, maximum penalties for corporate offenses are ten million euros – as "misdemeanour", such as wrong parking. Currently discussed drafts of a corporate criminal law want to link sentence to turnover, about up to 15 percent penalty on annual sales or up to an annual profit of company. That can and should be pain. In event of repeated serious mispasses, a company could be liquidated and deleted from commercial register. Then store is closed.

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